BCE Inc. Price & Performance (BCE)

Thank you, Matthew, and good morning to everyone on the call. And thank you you for joining us. With me here today are Myrko Vibic, BC's President and CEO and our CFO, Curtis Millen. Can find all of our disclosure documents, including the Safe Harbor notice our financial guidance targets for this year on the Investor Relations page of the BCE.ca website, which we posted earlier this morning. Have a lot of material to get through on this call. However, before we begin, I'd like to draw your attention to our Safe Harbor statement on Slide 2, reminding you that today's slide presentation and remarks made during the call will include forward looking information. And therefore are subject to risks and uncertainties. Results could differ materially. We disclaim any obligation to update forward looking statements except as required by law. Please refer to our publicly filed documents for more details on assumptions and risks. We Thank you, Thane, and good morning, everyone.

Our financial results in and in 2024 demonstrate our disciplined as we took the necessary near term actions to balance growth with profitability and to reduce costs to achieve our target objectives. In terms of overall consolidated financial performance, we achieved all our non revenue targets for 2024. Were also within our revised revenue guidance objective. Notwithstanding sustained aggressive wireless pricing in and continued softness in the traditional media advertising market. Notably, our consolidated EBITDA margin in [indiscernible] our highest annual margin performance in over thirty years. A few other select operating highlights for 2024, and I'll start with wireless. We delivered positive wireless service revenue growth despite the most pricing intense market we've ever seen. This is a direct reflection of our focus on premium brand customer loadings and managing our promotional offers responsibly. In fact, all our new postpaid customer net activations in 2024 were on the main Bell brand, [indiscernible] should help improve ARPU going forward. We grew broadband Internet market share and drove higher multiproduct penetration. This contributed to Internet revenue growth of 3.3% and a 12% increase in households that subscribe to mobility and Internet service bundles we have fiber. We now have 3000000 residential Internet customers on our FTTH network, and that's up 10% in 2024.

Our speed advantage and quality gap over cable shows in these results and that will continue to grow over time. Turning to Media. Grew digital revenue 19% over last year, helping to offset the secular pressures in traditional media, Digital now comprises 42% of total media revenue and that's up from 35% in 2023. And this strategic shift to digital will be supported going forward with investments we made this past year, including the availability of Crave, TSN and RDS content on Amazon Prime Video channels in Canada. The newly launched Crave, TSN and RDS bundles, a new self serve buying platform for advertisers looking to reach local audiences, for HBO and Max content and the launch of 10 new fast channels. We also made further progress in advancing our BCE transformation by continuing to leverage technology, automation and simplification to drive meaningful CapEx and meaningful operating cost efficiencies. These transformation initiatives together with savings realized from our workforce reduction program delivered well over $200,000,000 in cost savings in 2024. We're also seeing the benefit in terms of lowering CapEx which declined $6.84,000,000 dollars in 2024 to approximately $390,000,000,0.0 And our momentum to advance our position as a tech services leader in the business enterprise space also continued to ramp up in 2024.

With strong Business Solutions Services revenue growth of 18%. In summary, our performance in 2024 reflects a focus company in the midst of transformation, while at the same time driving day to day ex grow subscribers profitably and prudently manage costs. I'm going to turn to Slide 4 of our presentation. [indiscernible] that's delivering on its purpose to advance how Canadians connect with each other in the world. At the same time, we're operating in an environment with the lowest pricing we've ever seen, as I mentioned, and with continued macroeconomic and regulatory pressures. This has resulted in revenue declines. In this context, it's incumbent on us to develop a business strategy that will generate revenue growth. And critical to the successful execution of this strategic plan is prudent management of our balance sheet and capital allocation priorities. We've spent considerable time with our shareholders, So let me outline very clearly our plan of action that will carry us for years to come that focuses on our customers and on creating value for shareholders. It plays to our strengths and it prioritizes the following core elements: putting the customer first. [indiscernible] offering the best Internet and wireless networks and services.

Business Technology Services leadership [indiscernible] building a digital media and content powerhouse. There's a fifth pillar as well, and that's to continue to transform our business by leveraging technology, automation and simplification. In a way that's more agile, lower touch and digital to drive even more meaningful CapEx and operating cost efficiencies than we've already delivered. I'll now go through each element of the plan. Let's go to Slide 5. As you can see, it begins and ends with the customer. Customers are our top priority. They're looking to access faster, easier experiences on their terms. We strive to make it easy for our customers to do business with us. Whether that's doing what they say what we say we'll do getting you the right help fast, offering bill accuracy and transparency, making it right if we fall short, or providing the same information whether you call us, visit us or go to a store or go online. This approach drives significant cost savings and a massively improved customer experience, which results in better customer satisfaction, lower churn and ultimately revenue growth and higher customer lifetime value. Is the first Canadian telecom company to name a dedicated Chief Customer Experience Officer with a mandate to create best in class experiences for our customers in every encounter across all channels.

The new role is responsible for the entire customer experience from end to end sales, installation, billing, support, managing changes to plans and packages and technology changes. For customers, support with a technical or billing issue. And we'll continue to take advantage of the award winning MyBell app virtual repair and self install tools. But we know that everyone has a different level of comfort with technology, so we'll always provide options so those who prefer to speak to a customer service agent on the phone. Now let's go to Slide 6.

Our plan is to create sustained revenue growth that will benefit customers and investors now and well into the future. Our broadband Internet and wireless networks are the foundation of our business. Fiber is the future. It's the winning strategy offering the fastest Internet technology providing a more durable alternative to copper, cable or fixed wireless. We've been transforming ourselves into a fiber first company and that is going to continue. And our fiber growth will be supercharged with the acquisition of Zipli Fiber the largest broadband and fiber and net provider in The U. S. Pacific Northwest. This strategic acquisition will grow B. C. Position as North America's third largest fiber Internet provider. By year end 2028, we expect to have approximately 12000000 fiber passings in North America. Generating long term value for our customers and shareholders. And as we announced previously, we intend to finance the Zipli fiber deal largely with the net proceeds from the pending sale of MLSC. This is a very strategic redeployment of capital into our core business and a clear indication that we will act on compelling opportunities to monetize non core assets. It's a tough environment right now in Canada as the industry is going through a period of unprecedented [indiscernible] and as we continue to focus on costs and operational simplification, wireless will remain a key growth factor.

We're going to continue to focus on value accretion. Delivering better quality margin accretive subscriber loadings on our main Bell brand and increasing service bundle penetration and multi line sales. While managing pricing and churn. The third key area of focus to generate revenue growth is technology solutions leadership in enterprise. We've set an ambitious goal to generate $1,000,000,000 in annual revenue by 02/30. Our enterprise customers are transforming their businesses and they want our help.

We accelerated by the acquisitions of FX Innovation, HGC Technologies, StrataGem and CloudKettle. We're going to deliver among the best technology solutions in end to end cloud IT, workflow automation and security, leveraging our strong partnerships with AWS, Azure, Google Cloud, Salesforce, ServiceNow, Palo Alto and others that are complementary to those acquisitions and important to our success going forward. This supports our goal to become the IT systems integrator and manage services provider of choice to key industry verticals. [indiscernible] to a digital media and content powerhouse. That journey is well underway with 42% of our media revenue now coming from digital And here's something I haven't shared with you before. About half of that $130,000,000,0.0 in annual revenue is new digital revenue from products, including direct to consumer streaming, [indiscernible] connect to TV and other ad supported streaming options such as fast channels.

Notably, the other half of our digital revenue comes from advertisers buying ads on our traditional sales tools to optimize their ad campaigns. Bell first party data to optimize advertising placement on our traditional channels and Bell Analytics to measure the success of that advertising.

Importantly, this allows us to protect a large portion of our traditional revenue Because experience and value add of our digital tools. The fifth key pillars outlined on Slide 7, sorry, of our presentation As I mentioned, our execution will continue to be supported by our ongoing [indiscernible] And what I really mean by that is modernizing and simplifying how we do business and how we operate. Our goal is to generate $1,000,000,000 in cost savings by 2028 if not sooner. We have a number of focused initiatives underway. Consolidating our consumer order and billing systems, automating manual back office functions, deploying cloud based workflow management in CRM platforms, deploying a cloud based TV service, prioritizing digital interactions, enabling more self install, and of course, migrating customers from copper to fiber so we can decommission copper. We started this business transformation in 2022. And at the we were halfway towards our stated goal. I'll now turn to Slide 8 and address our balance sheet management and capital allocation strategy. Our approach to capital allocation is to balance long term investment to generate growth, while strengthening the balance sheet and optimizing our cost of capital. We remain focused on maintaining investment grade credit ratings for our senior debt and lowering our leverage ratio closer to our target policy of 3 times adjusted EBITDA.

Regarding our dividend, we recognize that we have an elevated payout ratio that is outside our policy range. That's reflected in B. C. Share price and dividend yield we are disappointed with. BC's dividend and dividend policy will continue to be reviewed by the Board taking into consideration the competitive macroeconomic and regulatory environments as well as the progress being made on the initiatives being discussed today. Also want to make clear that the discounted DRP DRIP DRIP is in place for now. As opportunities arise to monetize non core assets, access the hybrid debt market and establish more capital efficient ways to fund our U. S. Fiber build. All of which would drive a lower cost of capital then we would look to turn off the DRIP program. In terms of capital investment, we continue to lower CapEx and just as we said we would back in 2021 when we first announced our accelerated CapEx program. Last Feb. 0, we said that our plan was to reduce CapEx by more than $1,000,000,000 over the timeframe.

In fact, we're ahead of plan having achieved nearly 70% of that objective However, because of the CRTC's rejection on Monday of a Governor and Council request to reconsider its November 2023 decision, that provided TELUS and other large carriers temporary wholesale tariff tax access to our FTTH network. We are cutting CapEx by more than we anticipated would be the case for 2025.

And with that, our capital intensity ratio will be approximately 14% BCE 2025. This reduction is clearly greater than what we would have done otherwise. Consequently, we will not be delivering our fiber build out target of 8300000.0 homes by the end of this year. So what originally began as a $9,000,000 deployment plan in 2021 will now be less than $830,000,0.0 This decrease in our fiber build out is a direct result of the CRTC's refusal to ban TELUS and other large carriers from reselling the FTTP network we've built. We will revisit our build up plan if the CRTC reverses its decision. Our position on this issue has been stated many times. The CRTC's decision is, in our view, misguided as it goes against its longstanding facilities based competition policies, which have clearly encouraged private investment. These policies have enabled our significant network businesses for the benefit of Canadians. BC's capital intensity ratio including 16.5% while Bell standalone capital intensity is projected to drop below 14%. Regarding Zipli Fiber, that acquisition allows us to move capital to an asset that will drive significant growth in our core fiber business in the leverage neutral manner. We forecast very compelling IRRs for the targeted 3300000.0 homes to be passed by Zipli Fiber by the end of 2028.

We would review other potential opportunities to grow that fiber footprint but only with a build out structure that would bring third party capital to invest alongside Bell effectively reducing BCE's funding requirements. Turning to debt. We appreciate that many shareholders would like us to focus on deleveraging. We're carefully reviewing our non core assets and we'll continue to capitalize on opportunities to monetize them where it makes financial and strategic sense. This review process has already resulted in the planned divestitures of Northwest Tel and MLSE. Additional non core assets have been identified and any proceeds of their sale are expected to be used to strengthen our balance sheet improve our leverage ratio, optimize our cost of capital. Between Northwest Tel, MLSC and potential other non core asset divestitures, we see up to $7,000,000,000 being generated. In addition, there's a significant amount of untapped value that surface that value. Financial advisors have been retained to assist in this regard given the importance of such potential transactions. In conclusion, [indiscernible] The strategic and operational road map I've shared in detail today will guide our actions for 2025 and beyond. To quickly recap, and to summarize the main elements of that roadmap, here's what we're going to do.

Put the customer first in our decisions. Continue to execute in a disciplined manner in Canada, focusing on margin accretive subscriber growth using our fiber and 5 gs wireless network advantages, [indiscernible] technology services business rapidly accelerate Bell Media's digital revenue mix, generate $500,000,000 in further transformation savings to reach $1,000,000,000 by 2028 consider divesting up to $7,000,000,000 in non core assets inclusive of our pending sales of Northwest Tel and MLSC and optimize our cost of capital as we continue to focus on maintaining will share our progress on these various elements with the investment community transparently and regularly. Before I hand it over to Curtis for a review of our operating results and financial guidance targets for 2025. [indiscernible] with a couple of thank yous. First, to the entire Bell team for your perseverance, dedication and resourcefulness in a challenging environment And second, Jethane, as this is his last analyst call after many years of outstanding service to our company, which we greatly appreciate. And with that, Curtis, over to you.

Thank you, Marco, and good morning, everyone. I'll begin on Slide 10 with BC's consolidated financial results. Adjusted EBITDA was up 1.5% which drove a 90 margin improvement to 40.6%. As expected, total revenue was down 0.8% reflecting the flow through impact of sustained competitive pricing pressures, over the past year and ongoing declines in legacy voice data and satellite TV services. [indiscernible] net earnings and adjusted EPS were up over last year. Reflecting higher EBITDA and some non cash mark to market gains on FX hedges and options. CapEx was down $66,000,000 in bringing total CapEx savings to $6.84,000,000 dollars this year.

Was, as Merkel commented, well ahead of our plan to reduce capital investment at least $500,000,000 in 2024 BCE. Lastly, free cash flow was in line with our quarterly forecast, reflecting higher interest paid as well as the timing of cash tax and installment payments and working capital. Turning to Bell CTS on Slide 11. Postpaid net adds of 56550 were down versus a very strong last year. Consistent with our focus on margin accretive subscriber acquisition, all new customers were on the main Bell brand. While postpaid churn was up and remains higher than we'd like, it did represent a fourth straight quarter of deceleration Mobile phone ARPU was down 2.7% is a notable improvement versus the 3.4% decline in [indiscernible] we delivered over 34000 total new net retail subscribers. We continue to capture the majority of new growth in our markets because of fiber even as industry growth is slowing due to high broadband penetration fewer newcomers and less new fiber footprint expansion. In TV, we lost four forty four net IPTV subscribers in compared to a net gain of $23,537 a year ago. Due to lower Internet volumes and fewer 5 TV app activations. Which can vary quarter to quarter.

Moving to Bell's CTS financials.

Total revenue decreased 1.1% a sequential improvement from the negative 3.3% in Wireless service revenue was down 1.5%.

We expect the rate of decline will improve going forward as ARPU improves. However, the industry will be feeling the effects of the last eighteen months of competitive pricing on their service revenue for a while longer. Internet revenue was up 3.4% a solid result showing we're striking a balance between market share growth We also saw continued business solution strength where revenue grew 14% over last year. This was driven by higher sales of technology services, well as acquisitions made over the past year. When excluding the impact of those acquisitions, Business Solutions revenue still grew a healthy 6% organically. On the product side, overall revenue was up in marking a reversal from prior quarters in 2024. This was mainly the result of higher sales of land mobile radio systems, to large enterprise customers in the government sector. Lastly, Bell CTS EBITDA was positive.

Growing 0.7% to yield a strong 42.9% margin.

That's an increase of 80 points over last year. Driven by our continued focus on cost management as evidenced by a 2.4% decrease in operating costs this quarter. Over to Bell Media on Slide 12. Continued digital momentum and good overall financial performance marked by a third consecutive quarter of revenue and EBITDA growth. Digital revenues were up 6%, mainly on the back of strong 18% increase in Crave subscribers to more than 3600000.0 subscribers. On the strength of our digital strategy and contribution of OutEdge Media, total advertising revenue increased for fourth consecutive quarter. The Bell Media team also did a great job managing operating costs, which contributed to EBITDA growth of 14.2%. And a 2.3 increase in margin to 20.3%. That does it for quarterly results. I'll now turn to our 2025 financial outlook starting with revenue and EBITDA on Slide 14. Our consolidated revenue and adjusted EBITDA guidance were 2025 reflects the latest economic forecast and industry outlooks. There also remains continued regulatory uncertainty as a result of this week's CRTC decision. The competitive pricing environment has created flow through revenue pressure in our belt CTS segment for 2025. A sustained improvement in wireless and broadband Internet pricing will be key in our ability to deliver positive consolidated revenue growth this We also expect restrained enterprise customer spending on traditional network products and services and a continued market shift by wireless customers to BYOD mobile phone transactions.

Additionally, estimated revenue loss in the range of $125,000,000 in 2025. Following a $2.60,000,000 dollars elimination last year, due to the timing of the source store closures and transition of Best Buy Express in 2024. As this revenue is largely consumer electronics related, the impact on EBITDA will not be material given low margins for such products. While declines in legacy voice and data revenues will continue to weigh on Bell's CTS EBITDA our fiber 5 gs wireless and B2B solutions business, continue to present attractive growth opportunities. [indiscernible] Underpinning this expectation is our continued focus on premium mobile phone subscriber as we lean on our 5 gs network leadership. And ongoing market expansion driven by population growth and our progress in the newcomer market. Multiple device penetration gains, and multi product bundling with Internet and Bell Media contact. In our wireline B2B operations, our objective is to build on the momentum from 2024 to be the best systems integrator and managed services provider for our customers. While also leveraging our broadband fiber footprint to grow share in SMB. [indiscernible] At Bell Media, expect to deliver higher revenue. This reflects continued digital advertising and D2C streaming growth, as well as the contribution of Outage Media.

Which are expected to outpace declines in traditional media and favorable retroactive subscriber revenue adjustments in 2024. We also anticipate absorbing higher year over year content costs.

Given these segment outlooks and consistent with 2024 results, we're setting our 2025 guidance growth ranges at minus 3% to positive 1 for total revenue and minus 2% to positive 2% for adjusted EBITDA. Also anticipate a higher year over year margin supported by further cost savings the transformation initiatives that Mercko outlined earlier. And I will qualify that our revenue and adjusted EBITDA guidance ranges are unaffected by the pending divestitures of Northwest Tel, exclude the favorable impact of 15 for a summary of our adjusted EPS outlook. We project to be 8% to 13% lower compared to 2024. This year over year decline can be attributed mainly to the same factors as last year. Namely year over year step up in interest expense, higher depreciation and amortization expense consistent with ongoing but reduced spending in our broadband networks. And lower gains on the sale of real estate, related to our multiyear consolidation and conversion program. Additionally, for 2025, we're forecasting tax adjustments to be around $0,.03 per share less than last year. And a higher average number of common shares outstanding because of the discounted rate. Turning to Slide 16. Free cash flow is projected to increase by 11% to BCE This marks a return to growth driven by lower CapEx and an improved working capital position.

Partly offset by higher interest paid. As Merco stated, given this week's CRTC decision, we are now currently budgeting approximately $340,000,000,0.0 in CapEx for 2025. Which is $500,000,000 lower than last year. Our free cash flow outlook for 2025 also reflects stable to slightly lower cash taxes compared to last year. A relatively unchanged working capital position and cash pension funding that remains essentially unchanged. As we continue to benefit from a full contribution holiday given the strong solvency position of our defined benefit plans. Severance payments are also anticipated to be relatively the same at as 2024 at around $300,000,000 which remains higher than run rate given that a portion of employee departures related to the workforce restructuring initiative we announced were only completed in with associated 1 time payments be made in Turning to Slide 17. To take a moment to drill down on our expectations for capital intensity over the next several years. Both for standalone Bell and on a combined pro form a basis with the Zipli fiber included. Given that CapEx is such critical free cash flow drive, those stand alone CapEx spending going forward is now on a declining path given the planned slowdown of our fiber build in Canada.

As well as efficiencies from significant prior investments in digital transformation initiatives. As a result, we can operate Bell at a very efficient capital intensity ratio, approximately 14% this year, and below 14% beyond 2025.

As for Simply Fiber, they are currently accelerating their fiber build out like Bell did back in the 2021 to timeframe Therefore, they will be at a peak CapEx spending over the next few years.

Which will increase BC's capital intensity ratio more than on a standalone basis. Zipli Fiber's base case in footprint fiber build out to the can be fully executed at a pro form a combined company capital intensity level of around 16.5%. During which time they are projected to generate double digit EBITDA growth Turning to Slide 18. As we begin the year, have access to $450,000,000,0.0 of liquidity which is enhanced has been enhanced with a $500,000,000 increase in our committed credit facilities to $4,000,000,000 and a balance sheet with a sizable pension solvency surplus totaling $370,000,000,0.0 All this provides us with the financial flexibility to execute our business plan for 2025. Our net debt leverage ratio at the was approximately 3.8x adjusted EBITDA. Importantly, the acquisition funding for Zipli Fiber is leverage neutral and has been structured to maintain our senior debt credit ratings investment grade. We're keenly focused on reducing our leverage ratio which is projected to begin decreasing this year as we capitalize on all opportunities to monetize non core assets and use the sale proceeds to strengthen our balance sheet and optimize our cost of capital. Furthermore, all of our $210,000,000,0.0 of public debt maturities in 2025 have been largely pre financed and the Zipli Fiber transaction is being fully funded with the net sale proceeds from MLSE together with cash generated from the discounted DRIP.

I'm pleased to report that the initial participation rate has been strong with a 34% enrollment rate for the common dividend payment in Jan. 0, which resulted in $3.00 $8,000,000 of cash being obtained. The financial guidance targets we are providing today for 2025 are prudent given continued competitive pricing pressures, and economic and regulatory uncertainty. As we focus on the key strategic priorities that Merco outlined, to drive future growth, and undertake a proactive review of BC's asset portfolio to unlock value. We remain confident in our proven consistent operational execution and cost discipline to deliver under any circumstances. I will now turn the call back over to Thane and the operator to begin Q and A. Thanks, Curtis. So given the volume of information we presented this morning, I'm sensitive to the time we have left. So I would ask you to please limit yourselves to 1 question and a brief follow-up so that we can get to everybody in the queue. With that, Matthew, we're ready to take our first question.

Thank you. The first question is from Mary Yaghi from Scotiabank. Please go ahead. [indiscernible] And please let me join you, Merkel, with thanking Saint for his help over the years. Daniel will be greatly missed [indiscernible] question, Merkel, on your prepared remarks. You mentioned in the context of The U. S. Fiber footprint expansion, you mentioned the build out structures that could include third party capital. Can you elaborate a little bit on what that means in terms of additional CapEx or investments that BCE is expected to deploy in The U. S. And what could be deployed by third party capital? And you also referred to non core asset sales. Does that include Bell Media? And finally, on the dividend, in your Nov. 0 press release, you indicated that the dividend was set until the However, in today's press release, you indicated that the dividend could be reassessed if economic conditions change. Does this mean the dividend could be changed even before the end of 2025 if conditions change? Thank you, Mayor.

So let me take those. On the I think it was your second question on the non core assets and Bell Media. I think I can I'll go I'll deal with that one first because I can deal with pretty simply. So my prepared remarks, I did outline 4 core elements of our strategic roadmap to generate revenue growth. And you'll have noticed that 1 of them is to build a digital media content powerhouse. So I think that kind of answers your question right there at Bell Media and particularly the digital pivot is a strategic growth factor for us and think that's the best way to answer that question [indiscernible] On The U. S. Fiber build, I think the best way to answer that right now is just reiterate that our priority now is to close the acquisition of Zipli Fiber, And as I've mentioned several times, I think that transaction is going to move capital to an asset that's going to drive significant growth in our core fiber business, which is again best networks and fiber first companies, 1 BCE our BCE strategic growth factors. And we're going to do that in a leverage neutral manner. I want to emphasize that again.

And beyond repeating what I said in my remarks, I did say that we'd review other potential opportunities to grow the Zipli fiber footprint, but with build out structure that will bring third party capital to invest alongside us to reduce our funding requirements. I won't give specifics as to as to the extent of what that might look like other than think what's important to note, which I did not say in the opening remarks is that we have received a number of inbound calls asking us if we'd be interested in doing that. And to me, I mean, that's quite interesting, right? First of all, it speaks to the value and the attractiveness of the Zipli fiber asset and the potential for growth in The U. S. And it also speaks to the desire of third parties to work with Bell and particular. And it speaks to kind of our expertise in in fiber. So I'll leave it at that. On dividend, I guess I'd say that what we're going to do here on capital allocation is balance long term investment to You asked me 2 questions already about that. But at the same time, we're going to strengthen the balance sheet and optimize the cost of capital And that's how we're going to return value to our shareholders.

And And as I said in the opening remarks, the dividend payout ratio is elevated right now. It's outside our policy range. Don't like where the share price is at. And so the dividend and the dividend policy will by the BCE board. And as we do that, we'll take into consideration, like I said, the competitive environment, the macroeconomic environment, the regulatory environment and and the progress we're making on the various strategic and operational initiatives that I outlined So you wrap those 3 questions together, Maher, I'd say the message to take away from me is we're going to continue to execute in the market along the four or five Yeah.

Core vectors that I outlined. We're going to focus on our investment grade rating We're going to delever and we're going to optimize the cost of capital. Thank you, Erco. Thank you.

Our next question is from Drew McReynolds from RBC Capital Markets. Please go ahead.

Yes. Thanks very much. Good morning. Maybe I'll [indiscernible] [indiscernible] So first question just on leverage You ended the year at 3.8 times. And, Mercko, in your prepared remarks, obviously, pretty extensive kind of blueprint that you outlined. Just to give you additional financial flexibility, like where would you like to see leverage by the And beyond 2025, what does that kind of pace and timeline look like? And related to that, can you talk to your expectation of closing additional non core assets or some of those infrastructure options you may have in 2025, And then I'll have a follow-up after that. Thank you. Hi, Drew. Thanks for the question. It's Curtis.

So I'd say we're focused on maintaining our strong investment grade credit rating and we are focused on reducing our net leverage ratio as you say. So So continued focus on driving free cash flow growth, The asset review process as Merkel mentioned it's resulted as has already been publicly announced, our divestitures of MLSE in Northwest Tel. And there are a number of other incremental initiatives on the go each of which would actually help strengthen our balance sheet and optimize cost of capital. [indiscernible] reduce leverage. Don't have more details in terms of those initiatives keep everyone informed on our TransFent transparent manner as we make progress.

Okay.

Okay. And a follow-up then on just the revenue growth guidance range, maybe 3% to plus 1%. I think I caught Curtis in your remarks the plus 1% depends on a constructive competitive environment, but more broadly, You've called out macro, regulatory and competitive On the macro and regulatory side, First on the macro obviously, a fairly tariff potential tariff situation for Canada to be determined just what is your assumption in and around that? And then secondly, on the regular is it really and I don't want to belittle it just that the TPIA ultimate framework with big 3 restrictions or That treatment that's still pending, that's really an issue with respect to that revenue growth guidance range. So set it a different way, if we get decent outcomes on macro, decent outcomes on regulatory, decent outcomes on competitive, Are you comfortable in getting the flat to plus 1 as opposed to the bottom end of the range? Thank you. Yes. Thanks for the question, Drew. And look, I think on the tariff side of the world, it's a little early to know what the actual impact would be as of this date there are no tariffs, so we'll obviously be be looking at that closely.

Shouldn't be shouldn't be a material impact, but again, let's wait for details and see how that plays out. In terms of regulatory kind of similar question. I mean, it's it's the status quo at this point and unfortunately the CRTC pushed the decision down the line We don't think it's conducive to driving innovation and investment in in Canada and especially in our networks. But And then ultimately, as you know and as the market knows, I mean, revenue growth is dependent on pricing in market. And right now, it's it's a very competitive pricing environment. And improvements in certain areas over the last few weeks, but again, it's a matter of how long those pricing increases will be sustained. I'd add, it's Mirko.

I'd add on the regulatory front. Quite to put it bluntly, we're not in the business of building fiber for TELUS' benefit and that's what the CRT policy that's in place right now forces us to do. So to us, it makes no sense that the CRTC is forcing incumbent resale at a time, if you kind of combine your 2 questions, together, Drew, I mean, at this particular point in time, boost the Canadian economy and boost productivity. I don't understand why a regulator would put in place policies that create disincentives to investment puts jobs at risks and puts at risk the building out of critical infrastructure. It seems like the wrong policy at exactly the wrong time. And we all know that our world leading, I'd say Canada here, our world leading [indiscernible] on long standing facilities based competition policy that serve this country very well for years and years.

Got it. Thank you. Thank you.

Our next question is from Sebastiano Pettit from JPMorgan. Please go ahead.

Hi. Thanks for taking the question. Also, I'll echo congratulations to Thane. You will be missed. In terms of just maybe a couple of quick follow ups here. I think kind of on the topic of the following up on Drew's question there about just kind of the macro outlook. I think Curtis, in your prepared remarks, you did talk about maybe a little bit of decision making or implied essentially enterprise spend. But I mean, have your conversations with large enterprises SMBs advertisers demonstrably changed over the last few months. Or is there just more kind of unpredictability or uncertainty kind of baked into the guidance as we think about the macro outlook and just echoing on Merck's remarks just now as well. And then another follow-up Perhaps to your U. S. And U. S. Fiber strategy, Just on convergence and partnerships, obviously bundling is core to the Canadian telecom ecosystem. And a very big and emerging theme here in The U. S. An area of debate for the big 3 wireless operators. So I mean, as the wireless and [indiscernible] to inevitably [indiscernible] with a wireless operator or maybe stand up an MVNO to successfully compete in the rapidly converging market in The U. S. Just kind of given Zipli's relative scale to some of the other announced we've seen in The U. S. Market from telcos?

Thank you.

Thank you. It's Mirko. I'll take the second one first. The structure as you know, is is different in The U. S. The industry structure than it is in in Canada certainly at this point in time. And then I would point out really important to point out in the Pacific Northwest, it's a highly attractive, high growth market. And Zipli Fiber's footprint is basically either Zipli with its fiber or 1 cable company. So Zipli Fiber and its footprint isn't competing with integrated providers. And without the wireless offering at this point in time, the management team there has executed extremely well and continues to take quite significant and impressive subscriber growth, revenue growth and EBITDA growth, and we expect that to continue, especially as we proceed on its build out plans in its current incumbent footprint. On the macro side of things, I think the best way to kind of address the larger macro question Sebastiano is kind of I link it back to the pillars of growth that I outlined. If you think about our our best networks proposition and what we've delivered and what we continue to think we're going to deliver. We continue to take the majority of Internet net ad growth in the market, and we expect that to continue in 2025.

The percentage of customers we have on the highest speeds is impressive and we can expect that to continue. Our multiproduct penetration in Canada is continuing apace. And you see that in our results and in our Internet revenue growth results. And our wireless loadings are all on the premium Bell brand, which is something that we focus on all the time. So while the market isn't growing as fast in Internet or wireless as it had before, it's still growing and we're going to execute on these things as we have in the past. Again, to macro, go back to now media and digital media in particular that's continuing the pivot to digital is continuing at pace and we expect that to to continue quite strongly. On on business, whether or not it's small, medium or large, The big focus on business solutions We got to be mindful of what the macro environment will bring to budgets of our enterprise customers. But our Business Solutions revenue is going to continue to grow. And of course, we got to manage the overall environment. So cost will continue So all these things are going really well. Now pricing Curtis mentioned green shoots on market pricing both on broadband and wireless.

So hopefully, the green shoots that we're seeing in the early days of 2025 sustain themselves through '20 through the entire year. I would hope so, particularly when you think about the tremendous value that the industry provides to consumers and enterprises, in particular, [indiscernible] But those new pricing levels really do need to stick.

Thank you.

Thank you.

Our next question is from Vince Valentini from TD Securities. Please go ahead.

Hey, thanks very much. Lots of good stuff you're lots going back. First off, Dane, yes, all the best to you. At the risk of offending others I've dealt with over the years, you're definitely the best IR person I've ever dealt with in my thirty years.

So you'll be sorely missed, but all the best to you in retirement. I can just try to clarify that the revenue guidance first, Curtis. It sounds to me like you're saying The higher end is possible if recent pricing changes are sustained, I just want to make sure that's the case as opposed to are you saying we need even more than everything that's been announced in Jan. 0 in terms of broadband price increases by almost everybody and wireless price increases. If we just see those stick, is that enough to get you towards the higher end or do you need even more And I have a I'll throw the other question in now to make sure everything doesn't cut me off.

On the $7,000,000,000 target, I just want to unpack that and make sure we understand that properly. You've already announced 5.7 of the 7,000,000,000 between MOSE and Northwest Tel. So That leaves $130,000,000,0.0 only as new stuff you're working on for this year? Is that the way to think of that? $7,000,000,000 target and And can you clarify just is this stuff of [indiscernible] selling stuff that's non core and you don't need or is it are you thinking these are potentially sale and leaseback transactions or transactions with EBITDA implications, like is it really just a full net $130,000,000,0.0 of cash to pay down debt or is there are there potential offsets based on some of the transactions you'd be looking at Yes. Hi, Vince. It's Curtis. Thanks for the questions. I'll take the second question first. So you're right, that's the math. It's $130,000,000,0.0 implied, billion of other asset sales. And I would characterize them as Non core, this is not meant to be sale leasebacks that would have a capital lease component after the fact. Again, there might be some EBITDA sales, but all of this would be EBITDA sold as part of that. But these would all be deleveraging transactions and strengthening the balance sheet.

So you're thinking about it the right way. And in terms of the first question, in and around revenue and ability to hit the high end Obviously, there are many factors that flow into our revenue performance. High pricing in our higher pricing in market and if this pricing increase that we've seen over the last few weeks sticks that certainly helps. I mean, if it would go up a little more, it would help even more.

So I think it's too early to to pinpoint 1 specific variable, but certainly pricing in market Thank you. Our next question is from Aravinda Galipathigy from Canaccord Genuity.

Go ahead.

Good morning. Thanks for taking my question. And let me start by sort of offering my best wishes to Tane. It's been a great source of support and integrity during my time covering Bell. 2 questions 1 clarification from me. First of all, Mark, you indicated in your comments that that with respect to sort of The U. S. Fibrex say that you would go so far as maybe sort of having a separate entity operating that that may may not be controlled by Bell or may not be consolidated, but by Bell with the view to sort of keeping that off balance sheet. I realize that's a bit of a speculative question, but just wanted general thoughts on that And then secondly, which was respect to your Internet revenue growth, the 3.3% you've seen that number kind of ebb and flow between low single digit and mid. I mean, is it fair to say that going forward, it's really sort of price increases kind of helped keep that in the mid single digit range given given sort of the competitive dynamic in terms of subscriber share? Thanks.

On the second question on the Internet revenue growth, yes, pricing would be BCE the key lever there, particularly as you since you consider that we're continuing to take the majority of net ad growth. So So that's going to continue and therefore pricing becomes the key lever. And on the first question with respect to potential structures in The U. S, I think the most I can say right now is Again, we'd be looking at potential opportunities to grow the fiber footprint but only with build out structures that would reduce effectively reduce our funding requirements. And the most direct way to answer your question at this point in time is that as we think that through, we're going to remain focused on maintaining our investment grade ratings for senior debt, which is again 1 of the key things that I've I've made sure to emphasize more than once in our time together this morning execute in the market to drive revenue growth, focus on that investment grade rating delever, which Curtis again emphasized in response to Vince and optimize the cost of capital.

Okay. Thank you.

Thank you. Our next question is from Jerome Zuberis from Desjardins Securities.

Go ahead.

Good morning. Thanks for taking my questions. 2 on CapEx. Maybe you want to clarify the comments made on the decision with regards to the CRTC earlier this week. You said the reduction is related to the CRTC's decision this week, but at the same time, basically, they're just punting the decision later this year. So do you intend to increase CapEx again this year if the CRT blocks incumbent resale of fiber.

That is question number 1. And question number 2 is a bit more of a long term CapEx neutral level. At the AT and T Investor Day, we saw them announce a way to get rid of expensive copper through more usage of fixed wireless. Where there's no business case for fiber Is this something that you would consider and that would have regulatory support in Canada and maybe if you can talk about the potential savings that this could bring longer term, trying to figure out if there's ways to reduce CapEx further even if fiber builds come to halt.

On the first, I'll let Curtis will answer the second 1, Jerome. On the first On the first question, our CapEx guidance is set for the year as we outlined this morning and really as it relates [indiscernible] the regulatory decision and where it ultimately ends up later on the year, it's going to dictate how we allocate the capital within the guidance range you know what I mean. So we're going to have our CapEx budget and where we make the investments throughout the year and into the following years will [indiscernible] in a significant way be guided by that decision So that's how I would answer the question. So we can pull back fiber build or we can increase fiber build, but that will remain within the intensity ratio that we've guided. But what I do know, given This week's decision is that right now, it doesn't look like we'll be hitting the 8300000.0 target homes that we had outlined over a year ago.

And over to this for the second question over to Curtis Yes.

And the second question, Jerome, it's a good 1. Not as much clarity in the near term. I'd say long term, we're in alignment with you in terms of there's just an overall benefit to reduce legacy technologies and legacy networks.

Obviously, the path there is dependent on regulatory. So it's not complete within our hands. We do see in The U. S. A little bit more willingness to retire legacy networks and convert to newer technologies. Hopefully, that's the case up here. I do think there would be significant efficiencies in terms of maintenance costs as well as frankly our ability to sell copper and real estate of COs, etcetera. So I think it's a I think you're directionally right. It's difficult at this point to know timeline or scale, but certainly certainly eventually a win for us all.

Thanks and congrats, Dane as well.

Thank you.

Thank you. Our next question is from David Barden from Bank of America.

Go ahead.

Hey, guys. So much for taking the questions. It's I feel like it's a privilege be part of the last time that we all have an opportunity to ignore I'd mention to have 1 question and 1 follow-up. [indiscernible] Marco, so I wonder if you could elaborate a little bit because [indiscernible] Your statement About Not choosing not to hit. Your original fiber investment goal because of the regulatory environment, and this is a little bit of an escalation from last year's commentary It's basically saying that the Canadian fiber broadband business is uninvestable. And that you'd rather invest in The U. S. [indiscernible] if the CRTC continues going down this path, bad things will happen. And we haven't had a [indiscernible] look like, what What does what do you [indiscernible] happening if TELUS does come in to resell your fiber and what opportunities do you have to resell fiber in other markets of the future. I'd like to hear that like that scenario that that is so dire that it's changing your whole outlook about the capital investment opportunity that you foresee in the Canadian market. And [indiscernible] my follow-up question, Would be just specifically [indiscernible] Is Towers a non core asset?

And our tower is a thing that you think about monetizing as you address the balance sheet? Thank you.

Okay. So on your second question, I guess I'll just reiterate what I said in my opening remarks, which is there's significant amount of untapped value in telecom infrastructure. So looking at ways that we could surface value there. And that's why I pointed out that we've retained financial advisors to to assist us in that regard. But But however, we do that, that wouldn't be part of of the $7,000,000,000 that I outlined and that Curtis reiterated when he was responding to Vince's question.

On your first point, I think what I'm really trying to convey is the following. I mean, it's pretty clear that the most sustainable form of competition is through companies who build their own infrastructure. So we would always rather on the basis of networks we own. I think that's the simplest way to get at a couple of points that you were making in your first question. We want to build We want to compete against other well capitalized companies that build their own. And we're prepared to do that here obviously in Canada. And we're So what happens going forward? I didn't say that we would stop entirely building in Canada. What I said is that we're not going to hit the 8.3%, so there's going to be a significant slowdown pace of build If they're in greenfields as new housing continue [indiscernible] so long as we can generate the appropriate return to build infrastructure to new greenfield areas. But again, that means that a much, much slower pace of build in Canada than otherwise could have been the case. And it really comes down to where Where is this the best use of the next incremental dollar of capital in fiber?

That's where we're always going to be looking at and now we're going to be able to look at it from a kind of a broader footprint area.

Brownfield in Canada where we have legacy copper versus greenfield in Canada versus Pacific Northwest. The fact that we're having this conversation actually speaks to how inappropriate that CRTC decision was. And I know there's going to be a final ruling later in the year, and that's all well and good except that cabinet had clearly asked CRTC to make a ruling by this week, and they didn't.

Appreciate it, Marco. Thank you. Thank you. Next question?

Thank you. Our next question is from Patrick Ho from Morgan Stanley.

Go ahead.

Hello. Good morning. Patrick, on the line for Morgan Stanley. Help over the last few years. Just a couple of questions for me. Firstly, on the DRIP program, when exactly are you looking to turn this off? And are you guys targeting a specific payout ratio or leverage level or simply the closing of Zipli in order to decide to turn it off?

And then I guess secondly, just wanted to ask about your current back book as it relates to wireless. How much of this has been repriced the current pricing environment right now. Thanks, Patrick. It's Curtis. I'll address the first 1.

So look, as Merkel said a few times here, our intention is always to optimize cost of capital. So So we recognize that issuing equity at these levels is expensive. So the DRIP is not something we intend to keep in place long term. There's not a specific date I can give you, but ultimately the balance sheet actions and benefits that talked about throughout this call, prepared remarks and Q and A, that we've outlined obviously, that's going to accelerate the turning off of that drift.

And in terms of the back book, our key priority is to get churned down.

So customers that are with us we want to have them stay with us. That's how I'd answer the back book Thank you. There are no further questions registered at this time. I would now like to turn the meeting over to Mr. Fotopoulos.

Thank you, Matthew. So I just want to take a quick second to say thank you to Merkel for his kind words.

To all the analysts who have reached out to me in the past few months to their good wishes. And you've challenged me as has the investment community and I've been very privileged and honored to have been part of such a great company for the past twenty years. And the the industry for the past twenty seven, well over 110 quarters It's been an honor to be part of such an amazing company. I've witnessed a transformation of Bell from what it was to what it is now and there is the best is yet to come and we have the best team and leaders in place to do that, to take Bell to the next level. And I'll be watching from the sidelines very keenly And thank you to everybody, and I wish everybody the best. On that, That said, usual, Richard and I will be available throughout the day for any follow-up questions and clarification So thank you again and have a great day.

Thanks, everyone. Thank you.

Thank you. The conference has now ended.